Spending on conventional oil and gas exploration is rebounding and expected to top $50 billion this year, the highest since 2019, but operators are still waiting for the results they had hoped for. Rystad Energy research shows that despite the rising investments, discovered volumes are falling to new lows.
Our estimates show that in the first half of 2023, explorers found 2.6 billion barrels of oil equivalent (boe), 42% lower than the first half of 2022 total of 4.5 billion boe. Fifty-five discoveries have been made, compared to 80 in the first six months of last year. This means discoveries in 2023 have averaged 47 million boe, lower than the 56 million boe per discovery for the same period in 2022.
The exploration and production (E&P) industry is in a transitionary period, with many companies exercising increased caution and shifting their strategies to target more profitable and geologically better-understood regions. This strategic shift and the failure of several critical high-potential wells are contributing to the precipitous drop.
In the hunt for new resources, exploration companies are prioritizing the offshore sector, trying to capitalize on underexplored or frontier areas to unlock new volumes through high-risk, higher-cost offshore developments. The offshore industry accounted for about 95% of exploration spending this year to date but only about two-thirds of discovered volumes.
This combined with "Crude oil inventories in the United States unexpectedly fell sizably this week by 15.4 million barrels" Is quite the setup. Both oil futures and oil stock markets totally missed this in 1st half of 2023, as both declined. Catchup going on now. BTW it was obvious to many this setup was happening, why the blindness? Both FedRes and Biden did not want oil up for inflation reasons and the media did their bidding? Think that is very possible as said so as it was going on. Also conformist groupthink was divest all oil investments oil has no future and EVs will replace all gas cars fast, without thinking it thru. We would have to mine more copper in next 25 years than in all human history just to pull that single thing off (impossible).
So? EOR is very necessary for oil supply. Companies like Prospera that have huge oil reserves compared to mkt cap are natural winners in oil shortages. At $120 oil bet they can figure out how to get a bunch more of that 400 million barrels of oil in place with roughly 9% recovered. 20% more is 80 million barrels. Oil recovery has never gone down only up. I do not know how but do know in many ways advances wil be made. In 10 years maybe 50% recovery is possible? At 25% more that is 100 million barrels X $100 = $10 billion. Current mkt cap $34 million Cad. It will take many years to get it out, but still what an amazing ratio between future revenue and mkt cap today
Cheers
